Postcapitalism lecture: London School of Economics
Around the year 2000 the amount of red on the map begins to totally overwhelm the green. Between in the five years before the financial crisis the global money supply expands from $27 trillion to $70 trillion. And the Martian economists on board the ship say: “you know what captain, one of these blobs is gonna explode”. And boom on 15 September 2008 it does.
.. 27,000 people are producing a thing called Wikipedia, so we don’ t know whether to put them altogether into a blob or just call them a network of little dots. We might have to have yellow blobs as welll as green ones.
How much does Wikipedia turn over a year? Says the captain. Wrong question — says the anthropologist. The right question is how much value does its existence deduct from the market economy? How much of the red stuff does it replace. And the answer is about $3 billion.
.. Neoliberalism is broken.
You bring in fiat money in 1973 and that allows you to expand credit, over and over, unrelated to the amount of precious metal or indeed economic activity. Credit, derivatives and financial complexity go stratospheric.
.. 47% of all jobs could be quickly automated, starting with office admin and retail, we don’t automate. We hold conferences about robots, AI, machine learning: but we create millions of low-skill, low pay jobs that probably don’t need to exist.
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The Keynesian playbook says you dismantle neoliberalism by attacking financialisation, empowering workers, raising wages, growing the welfare state, re-regulating business, dis-incentivising low-wage, low social responsibility businesses.
But these are only palliative measures
.. And information is doing something radical to economics. It is corroding the price system.
.. What happens if the cost of reproducing something it close to zero? Under conditions of competition and private ownership its market price should fall close to zero. It is this zero marginal cost effect that underpins the whole information revolution.
.. The Information is Beautiful website has calculated that a signed solo music artist would have to get 1,800 plays on iTunes to make the minimum wage, while they would have to get over 1.1 million on Spotify to earn that.
.. The problem is we have no idea how to value this exponential impact. Economics are rooted in the concept of scarcity. There is nothing economic that is not scarce, Walras writes in the founding text of marginalism.
.. So the most imporant impact of info-tech is to make things that were expensive cheap or free, to cascade this effect over into the physical world, and to dissolve the price mechanism, and to make accountancy guesswork.
.. The salariat? We get on a plane to Brussels at 7am, sit elbow to elbow typing into Excel. If it was a factory it would be shut down on health and safety grounds. Yet it is a factory. We are all working. But because nobody asks: when did you start work, we are not paid for the hours. We are constantly at work; and our work and leisure completely blurred. As a result the link between our wages and hours are also broken.
.. information technology
… by corroding the price mechanism
… by blurring work and life, and delinking hours of work from wages
… by replacing hierarchies with networks
… by triggering an upsurge in collaboration, non-managed work and non-market exchange
… lays the basis for a transition to postcapitalism.
.. That’s fine until you introduce yellow lines: production of free stuff using networks of decentralised people who are not paid wages. This is the problem modern accountancy has with infotech. It just looks like a giant deduction from the market economy.
.. What you need is a unit of measurement that can measure paid work against unpaid work, commodities in a marketplace against free stuff given away or, as in the case of creative commons, shared on a conditional basis.
This was Von Mises supposedly killer argument in the socialist calculation debate of the 1920s and 1930s. The plan can’t decide to produce a ton of wheat or a ton of iron unless there’s a common unit of measurement for both. And if one is produced in the market economy, and the other in the plan, you’re going to have chaos.
.. Mises admits in Economic Calculation and the Socialist Commonwealth that if the labour theory of value is correct, there is no calculation problem.